Another topic heavily discussed at Heckerling is the Corporate Transparency Act (“CTA”). I never thought that as an estate planning attorney I would need to become familiar with anti-money laundering legislation but the CTA is coming and it is going to affect nearly everyone I work with.
Here are the high points:
1. Starting in 2024, every new entity that is registered with the Secretary of State (LLC/LP/corp) that does not fit into a few exceptions (has more than 20 full-time employees, non-profit, more than $5M in gross sales) MUST file with the Financial Crimes Enforcement Network (FinCEN). You read that correctly, every new family investment LLC, service corporation, real estate entity MUST file with FinCEN.
2. Penalties are high – $500 a day, up to $10,000 and up to two years in jail.
3. All existing entities MUST file with FinCEN by 1/1/25.
4. Information provided to FinCEN will include: information on the application (usually an attorney’s office) as well as the beneficial owners of the entity
5. Trusts will not be required to report because they are not registered with the state.
6. Registration must be updated (and subject to penalties for failure to file or filing late) when triggered by certain events such as change in beneficial ownership
7. NO REASONABLE CAUSE EXCEPTION